“Trying to get by on cookies made with dirt, vegetable oil and salt”

I have talked about ethanol time and again on the blog, not only about the subsidies for ethanol, not only about the fact that it is a bigger pollutant than gasoline, but ethanol is causing food shortages and an increase in food prices.

Investor’s Business Daily has an article that outlines what happens when the government decides pay to burn food for fuel:

In America, the federal government pushes the production of ethanol from corn with a rich mix of tax incentives and protectionism. Refiners get a 51-cent tax credit for every gallon of ethanol they produce and are shielded from cheaper imported ethanol with a 54-cent-a-gallon tariff.

The result, totally by design, is that a huge swath of the U.S. corn crop that would otherwise go to food for people and animals is diverted to ethanol.

The National Corn Growers Association says 2.3 billion bushels of corn, or nearly a fifth of U.S. production, went into ethanol in 2007. That’s up 28% in just one year. It also is 18% of U.S. corn production, a percentage that is bound to soar.

Ethanol production reached 6.5 billion gallons in 2007, and it’s headed to a federally mandated 9 billion this year.

So what happens when you take that much food off the marketplace and dedicate it for ethanol?

On corn, now at a record $6 a bushel, its impact is clear enough. And high-priced corn makes food costlier in all the supermarket aisles, from baked goods and cereal to meat and soft drinks.

Ethanol demand also raises the cost of other grains, such as soybeans, by crimping supply; it shifts land to corn production and leaves that much less for other crops.

These subsidies to promote the production and use of ethanol are benefitting only the agriculture industry. And I don’t mean the family farmers, but the corporate farms. While I don’t have a problem with them making a profit, I don’t think they should make a profit because they get tax breaks and prohibit others from selling the same product for less.

Our federal policies on agriculture do more harm globally then most people realize. I covered just a few of the effects in “America’s Farm Subsidies and the World Economy.”

Don’t misunderstand me. The federal government isn’t the only reason “the poorest Haitians are trying to get by on cookies made with dirt, vegetable oil and salt.” As IBD notes:

So who or what is to blame? There is no shortage of culprits, natural and man-made. Droughts have cut grain harvests. The global economic boom has raised prices by hiking demand for higher-end food such as beef (it takes a lot of grain to feed cattle) and of food in general. The spike in oil prices has made farming more expensive, from tractor fuel to fertilizer.

But we need to understand our role in the food shortages around the world. The federal governments meddling in the free market has adverse effects worldwide.